Zambia’s economic resilience has received a pat on the back from reputed global lenders inspite of the country facing some setbacks in realigning its economy ahead of its projected middle income status in 2030.
A recent rating by globally reputed, World Economic Forum (WEF), Zambia, one of the fastest growing economies not only in Southern African Development Community but in the continent as whole, has received recognition as one of the best top 10 economies for last year. This rating is on account of the country’s prudent monetary policies.
The global rating grouping in its recent report states that Zambia was last year recognized as one of the top 10 most competitive economies in Africa.
According to the report, Zambia, Africa’s largest copper producer trails Namibia, Seychelles, Botswana, Rwanda, South Africa and Mauritius, which were ranked as the most competitive economies in Africa. Out of the 148 countries surveyed globally.
Zambia moves from last year’s 102nd position to 93rd as one of the countries which recorded remarkable progress. Globally, however, the country has recorded a marginal movement of three places down from last year’s ranking of 93rd to 96th out of 144 countries, scoring 3.86 points.
The WEF founder and executive chairperson, Klaus Schwab attributed the improvement in Zambia’s economy to prudent monetary policies and moderation if food prices, however citing factors such as rising fiscal deficits are among deterrents to growth.
Professor Schwab said Sub-Saharan Africa continues to register impressive growth rates close to five per cent, maintaining the momentum will require the region to move towards more productive activities and address the persistent competitiveness challenges.
He however said only three Sub-Saharan economies including Mauritius (39th) South Africa (56th) and Rwanda (62nd) score in the top half of the global ranking.
Schwab said, overall, the biggest challenge facing the region is in the addressing human and physical infrastructure issues that continue to hamper capacity and affect its ability to enter value added.
“As growth is now moderately returning in advanced economies, sub-Saharan economies carry on registering impressive rates of close to five percent in 2013 with raising projections for the next two years below only emerging and developing Asia,” he adds.
Yet important downside risks remain; although inflation has been coming down from the high rates of the past two years-thanks to prudent monetary policy and moderating food prices, rising fiscal deficits are more exacerbated in Zambia, Ghana and Gambia,” he adds
The global competitiveness report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), which was introduced by the World Economic Forum in 2004.
Defining competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country, a GCI scores are calculated by drawing together country-level data covering 12 categories.
These are; institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophiscation and innovation.
Recently the World Bank noted that Zambia will continue recording higher economic growth rates which will largely be driven by massive copper investments and high domestic demand for goods, country representative for Zambia, Malawi and Zimbabwe Kundhavi Kadiresan said. In its third Zambia Economic Brief (ZEB) launched in Lusaka yesterday, the World Bank stated that the country was on course for higher economic growth rates. “The medium-term outlook is for growth to stay robust, supported by domestic demand and the global recovery, but with real downward risks. Real Gross Domestic Product (GDP) growth is projected to increase from an estimated 6.4 per cent in 2013 to 6.5 per cent in 2014 and to stabilise around 6.5 per cent in 2015-16,” the report stated. The third ZEB is themed- Promoting trade and competitiveness: What can Zambia do? The report, however, outlined the changing external conditions, declining copper prices, the tightening of international financial conditions, which are likely to lead to higher borrowing costs; volatile portfolio inflows are growing risks that could lower investment and growth. Further, the report said Government should strengthen its capacity to identify suitable projects, manage its debt portfolio and develop a medium term debt management strategy in light of its rapidly changing debt situation.
Further, the report said Government should strengthen its capacity to identify suitable projects, manage its debt portfolio and develop a medium term debt management strategy in light of its rapidly changing debt situation. Kadiresan said it was of great importance for Zambia to maintain this direction to consolidate its fiscal position, in the face of difficult choices that lie ahead.
“The country needs to take a closer look at its public investment programme to ensure good value for money through project appraisal,” Kadiresan said.
On the promotion of trade and competitiveness in Zambia, the report said Zambia was doing generally doing well on exports, saying that non-copper merchandise exports grew by 22 per cent per annum from 2002 to 2012 and copper exports stood at 27 per cent.
Kadiresan expressed concern that the gains in the growth exporters were often transient and firms exit the export market nearly as soon as they enter it.
The report further notes that trade also plays an important role for the poor, adding that if Government focuses on poverty reduction, it was important to consider the small traders that make a living out of cross border trade.
Speaking at the same function, Finance Minister, Alexander Chikwanda said Zambia had continued to post favourable growth in the last three years with the GDP projected at around 6.4 per cent in 2014.
Chikwanda said the economic brief would provide useful information to the public on the country’s economic activities and this would help Zambia remain among the 10 fastest growing economies in the world and among the fourth in the sub-Saharan Africa.